JEL classifications: G30; G32; G34
Keywords: Customer concentration; firm risk; interlocked board; independent directors; relationshipspecific investments; information asymmetry
학회소식
[2019년 제 3차] Customer Concentration and Firm Risk: The Role of Independent Directors from Customers
작성자 : 관리자
조회수 : 112
게시일 :
2019-08-29
This paper examines the effect of independent directors from major customers on suppliers’ risk arising
from customer concentration. Using a sample of U.S. suppliers over the 2001-2016 period, we find that
a positive relation between customer concentration and suppliers’ risk is weakened when customers’
representatives sit on the suppliers’ board as independent directors. We further show that the presence
of independent directors from customers is positively related to suppliers’ aggressive financial policies
by having higher leverage, lower working capital and lower cash reserves. Our results suggest that
customers’ board membership at suppliers helps alleviate the customer concentration risk by
strengthening the relationship between suppliers and customers and reducing their information
asymmetry problem.
